Gold Technical Update
XAU/USD Daily Chart 9:10PM EDT 7/12/2012
Gold continues to trade in a triangle, congestion pattern, making high lows, and lower highs as seen in the daily chart. Note the RSI stuck between 40 and 60 and sign of a directionless market. You can say that entering the triangle the market was bearish, and since the RSI has not broken above 60, the the bearish momentum in the daily time-frame is still on.
Jumping down to the 1H chart we see a market that is bullish in the near-term as price action rallies sharply away from where the moving averages were clustered. The clustering reflected a flat market, so the bullish attempt is one swing (not part of a trend).
The RSI pushed above 70 which introduces some near-term bullish momentum, but again the RSI was below 30 on 7/23, and therefore there is no sign yet that this bull run is sustainable.
The upper bollinger band (parameter: 3 std deviations from the 200SMA) is being tagged. This is a sign that the market is overbought in the near-term as well.
If the market slowly marks a higher high, let's say near 1610, but the RSI high is lower, and the price stays within the bollinger band, we would get a clue that the rally is exhausting.
A strong push above 1610 would be suggesting AGAINST the consolidation idea posed here, especially since it breaks above the triangle resistance. This exposes the 200-Day SMA near 1654, as well as another declining trendline near 1670.
XAU/USD 1H Chart 9:15PM EDT 7/25/2012
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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